Innovative multinational pharmaceutical companies have seen their profits substantially
decelerate in recent years. Patent expiry, rising generic competition, and lower R&D
productivity have all contributed to Big Pharma’s anemic growth in mature
pharmaceutical markets. To solve for Big Pharma’s profitability problem, this thesis sets
out to investigate whether emerging markets expansion is the solution. Given the
obstacles of poor intellectual property, generic competition, and poor market access due
to affordability and pricing, the question is not really whether Big Pharma should expand
in emerging markets, but how. To answer these questions, theoretical principles from the
economic literature are used to explain the opportunities and risks presented by various
Big Pharma strategies. Specifically, quantitative and qualitative data are collected
through two studies: (i) a broad, global survey of Big Pharma strategies in emerging
markets based on Annual Reports and the literature; and (ii) an interview-based localized
case study of Big Pharma in Indonesia. Results indicate that there are four key strategies
Big Pharma should use to expand their presence in emerging markets: (i) tiered pricing
and proof of economic value during tendering and negotiations; (ii) local development
through collaborative education, research, and advocacy efforts; (iii) foreign direct
investments to plan for long-term presence in emerging markets, and (iv) tying up
intellectual property protection with international trade benefits through lobbying efforts.
All of these strategies involve aligning Big Pharma interests with the incentives of local
public and private sector actors. Although the question of Big Pharma profitability is
business-oriented, executives must realize that successful emerging markets strategy
depends on the development of local economies. Likewise, health policymakers who are
able to understand the Big Pharma perspective can better leverage the power of the
private sector to meet the healthcare needs of their populations.